Singaporean companies should contemplate trading abroad

In a world of continuing economic uncertainty, firms that trade internationally are reporting significantly better revenues and profits than those businesses sticking to their domestic market. 50% of global firms which export say they’ve increased profits over the last 12 months compared with just 38% of companies which only trade domestically.

And while South East Asia is the most profitable destination according to Singaporean businesses, China and India are increasingly popular and profitable markets. Be that as it may, a variety of worries are stopping even more businesses from operating abroad.

Building an image abroad, complicated foreign tax systems, property costs and paperwork, political instability and natural disasters such as flooding or earthquakes are real concerns preventing Singaporean firms taking that big, lucrative, step overseas.

Those are the main findings of the second Global Survey report on export from Regus which canvassed opinion from more than 20,000 senior business managers in over 90 countries around the world.

The survey really does show the benefit of overseas expansion, with substantial differences in both revenues and profitability which are clear to see. Any company, large or small, which is not already trading abroad, to broaden its markets should certainly have that target right at the top of its New Year’s resolutions.

Whether it’s because their own domestic markets are slowing or foreign markets are now more receptive to their products, all businesses, wherever they are, do need to be setting their sights further afield.

Aside from their own domestic market, almost half of businesses globally agree that China, with its growing middle class and increasing pro-capita income, is the ideal region for expansion. Europe is seen as the next best destination, probably due to long-term existing export ties within the Eurozone and the presence of stronger economies such as Germany and the UK.

Businesses that are exporting tell us that expansion to new markets should not be something feared, facilities such as Regus business hubs can help overcome perceived hurdles such as paperwork and property costs and give companies a local presence without the financial risk that has traditionally been associated with expansion abroad.

Key Findings and Statistics
Over the last 12 months, 50% of companies trading internationally said profits had grown compared with just 38% of firms concentrating domestically
In the same period, 59% of companies which export said their revenues had grown compared with 37% of firms focused domestically

In Singapore, South East Asia is the most popular market with 77% rating it as most profitable, China (66%) and India (36%) are the second and third most popular with Other Asia (31%) following.

In Singapore, over half (65%) of firms say paperwork and property costs are the biggest obstacles to setting up a presence abroad:

• Managing local taxation regulations (50%) and risk management (39%) – including political risks and possible natural disasters such as earthquakes, typhoons and flooding - follow staff recruitment (37%) follow.
• Operational staff recruitment also concers nearly two-fifths of respondents at 37%.
• Building an image abroad is also a significant issue for 32% of firms.

It is clear there are some big challenges facing companies who want to move abroad. Once that initial enthusiasm has worn off, companies find they are bogged down with paperwork or red tape or have real difficulty establishing a physical presence in a foreign country.